Part 3- Contracts, Chapter 18: Performance and Remedies, Doc 2

This section discusses standards for contract performance, conditions for duties, and remedies related to contract breaches. Here’s a summary of the main ideas: Key Points on Contract Performance Standards 1. Strict Performance vs. Substantial Performance: o Strict Performance: Requires perfect adherence to contract terms and is typically applied to easily exact obligations (e.g., payments, delivery of goods, deeds). If the condition isn't met precisely (e.g., missing a payment deadline), the promisee’s duty is not triggered, and the promisor may face breach consequences. o Substantial Performance: Allows minor deviations if perfect performance is challenging or unnecessary. This standard applies in cases like building construction, where minor defects don’t deprive the other party of the essential benefits. A party who substantially performs can demand payment, minus damages for minor defects. However, substantial performance cannot involve willful breach. 2. Express, Implied, and Constructive Conditions: o Express Conditions: Explicitly stated conditions using terms like “if” or “provided that.” For example, a contract may require a certificate from an engineer before the owner’s payment duty arises. If the party fails to meet the express condition precisely, the other party's duty may not arise. o Implied Conditions: Assumed based on the nature of the contract, such as needing a ship’s arrival before unloading cargo. o Constructive Conditions: Imposed by law for fairness, like requiring a builder to complete a structure before receiving final payment. 3. Excusing Conditions: o Conditions may be excused in cases of hindrance (e.g., when a party prevents fulfillment of a condition), waiver (voluntary relinquishment of the condition), or estoppel (if a party leads another to reasonably believe the condition won’t be enforced). o Courts may excuse conditions to ensure fairness, especially when one party prevents performance or gives assurances that a condition isn’t critical. 4. Examples and Case Applications: o Satisfaction Conditions: Contracts may depend on subjective satisfaction (personal taste, like artwork) or objective standards (mechanical fitness). Courts apply a “reasonable person” test for mechanical standards and require honest dissatisfaction for personal taste. o Attorney Approval: In Harbor Park Market v. Gronda, a clause allowing attorney approval gave the sellers' lawyer discretion to reject a contract, even for a better offer. Courts respect such broad clauses unless there’s evidence of bad faith or obstruction of contract terms. 5. Good Faith Performance: o Contract law increasingly requires parties to act in good faith, ensuring neither party obstructs the other’s expected benefits. This duty spans various contracts, including lending and employment. Bad faith may lead to breach remedies, sometimes even tort claims. Remedies and Implications of Breach  A promisor who meets the required performance standard (either strict or substantial) has fulfilled their duty and can enforce the other party’s duties. Failure to meet strict performance may result in no compensation, whereas substantial performance allows for adjusted payment reflecting any minor issues. In conclusion, the performance standard depends on contract type, with strict performance applied for precise obligations and substantial performance allowed for complex or technical work. Courts also consider good faith in enforcing conditions and performance standards, ensuring fairness and reasonable interpretation of contract duties.